U.S. Companies Face Dilemma As Globalization Loses Appeal

President Donald Trump’s protectionist strategy is representative of a broader shift — one casting U.S. companies into quite a quandary.

Since 2011, when global trade rates had nearly recovered from the 2008 economic crisis, major economies have opted, without the dramatic catalyst of a global financial shakeup, to lessen dependence on exports and emphasize domestic operations.

This strategy does not preclude contributions from foreign businesses. Rather, it pressures international companies to set up shop locally rather than shipping in end products. Many nations now require local sourcing or manufacturing to win government contracts or financing — or to do business within the borders altogether.

No Easy Answer

This leaves American companies with a tough choice: Answer the demands of global consumers or of the Trump administration, the latter of which has threatened heavy taxes to continue foreign operations.

General Electric Company GE has opted, not without pause, to cater to the former. The company recently began constructing a $200 million factory in India to win local business.

“There is a strong trend toward economic nationalism all over the world,” CEO Jeff Immelt told shareholders in February, noting that GE must localize production rather than rely on trade deals.

Fellow executives reported that many international contracts, a number of which involve governments, demand 30–70 percent of machine contents to be domestically produced, according to the Wall Street Journal.

So, GE is abandoning its global approach and localizing — conceding the value of community presence in securing contracts and leveraging the strategy, even at the expense of production scale.

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